Land tax hikes, introduced during the Queensland government's June budget announcement, have been dramatically withdrawn following fears foreign land investors would abandon Queensland.

The land tax absentee surcharge was increased from 1.5 to 2 per cent, along with a widening of the definition to include foreign companies and trusts.

The Palaszczuk government has agreed to broaden exemptions on the increase to its surcharge in its mid-year fiscal and economic review.

The increase was expected to provide the state government with an extra $540 million over a four year period.

It has now been revised down by $291 million, a 46 per cent reduction in the revenue, following consultation with industry leaders regarding the implementation of a potential tax increase.

The newly-introduced foreign land tax surcharge exemption framework will now match Victoria’s exemptions.

Exemptions will now apply to listed entities and widely-held trusts, and to developments and business operations that are deemed to make a significant economic contribution to Queensland.

Property Council Queensland executive director Chris Mountford said the result would not have been possible without an industry-wide mobilisation.

“While the outcome is still not ideal and we continue to firmly hold the view that these types of taxes will only hinder the Queensland economy.”

“Taxes on business and investment are ultimately taxes that will be borne by Queenslanders.”

The state government originally set a target of raising $1.47 billion over the next four years through three expanded taxes.

Companies and trustees with holdings over $5 million will pay 0.25 per cent more in land tax, and the absentee land tax surcharge has been lifted from 1.5 to two per cent.

Australians and permanent residents remain exempt from absentee land taxes.